Good Choice 2016 Limited & Anor v The Commissioners for HMRC
[2024] UKFTT 544 (TC)
Conditionaire Energy Savers Ltd & Anor v The Commissioners for HMRC
16 November 2023
[2023] UKFTT 977 (TC)
First-tier Tribunal
A company didn't keep proper records for its taxes and claimed it sold its records to a company in another country. The tax authorities said the company deliberately hid tax issues. The court agreed and the company had to pay the taxes and penalties.
Key Facts
- •Conditionaire Energy Savers Ltd (the Company) appealed against a 'best judgment' assessment (£117,409) and a penalty assessment (£99,797.65) for VAT irregularities.
- •Peter Ernest Williams (Mr. Williams), the sole director, appealed against a Personal Liability Notice (PLN) for the penalty.
- •The Company failed to provide necessary documents to verify its VAT returns.
- •The appeals were determined on the papers due to Mr. Williams' ill health.
- •The Company claimed that the sale of its assets to Envirotech Limited in the UAE prevented access to records.
- •HMRC argued that the Company's VAT returns understated its liability and that the inaccuracies were deliberate and concealed.
Legal Principles
Section 73 of the VAT Act 1994 allows HMRC to make 'best judgment' assessments if a taxpayer fails to provide necessary documents.
VAT Act 1994, s.73
Schedule 24 of the Finance Act 2007 outlines penalties for deliberate and concealed inaccuracies in VAT returns.
Schedule 24, Finance Act 2007
The burden of proof lies on the taxpayer to disprove a 'best judgment' assessment, but on HMRC to prove deliberate and concealed inaccuracies for penalty assessments.
Case law cited, including Bustard v. HMRC [2015] UKFTT 546 (TC)
The standard of proof in civil tax cases is the balance of probabilities, but more cogent evidence is required for serious allegations like deliberate and concealed inaccuracies.
Phipson on Evidence, §6-57; Case law cited regarding Article 6 of the ECHR
A deliberate inaccuracy occurs when a taxpayer knowingly provides HMRC with an inaccurate document intending HMRC to rely on it as accurate.
Auxilium Project Management v HMRC [2016] UKFTT 0249 (TC); CPR Commercials Ltd v HMRC [2023] UKUT 61 (TCC)
Concealment, in this context, means making arrangements to prevent the inaccuracy from being visible.
Leach v HMRC [2019] UKFTT 352 (TC)
Paragraph 19, Schedule 24, Finance Act 2007 allows for personal liability notices for officers of companies responsible for deliberate inaccuracies.
Paragraph 19, Schedule 24, Finance Act 2007
Outcomes
The appeals were dismissed.
The Tribunal upheld the 'best judgment' assessment, penalty assessment, and PLN. The Company failed to provide evidence to disprove the assessment, and HMRC successfully demonstrated the deliberate and concealed nature of the inaccuracies in the VAT returns.
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